Monday, July 21, 2008

Microfinance Management and Investment Advisory

M2i Founders Chase A Dream; Set Up Firm To Offer Advisory Services To Microfinance Companies.

M2i consulting has been set up to catalyze the growth of microfinance by bringing in more professionalism in the sector. Towards this mission, they endeavor to work with start-up as well-established MFIs, entrepreneurs, investors and donors and provide such services which facilitate integration of microfinance with the economic mainstream.

They bring in best application of modern management principles to microfinance, by continuously assimilating knowledge from diverse fields and by building on the body of knowledge within the microfinance domain. They use rigorous analysis to solve complex management problems, while maintaining absolute clarity in the recommendations they make. Their processes are designed to ensure an intellectually rewarding experience for their clients, as well as, for us.They interact closely with their clients to provide customized solutions. While they emphasize on innovations, they follow them up with rigorous validation and standardization to ensure sustainability of these innovations.

Imagine building a business plan by combining a love for travel, desire to see development in villages, financial acumen and college friendships. That’s what three students at the Institute of Rural Management, Anand (IRMA) did in 2001. Deepak Alok, B Atul and Rajeev Kumar used to discuss how market forces could aid development. One compelling area to look at was the fledgling industry of microfinance, banking for the marginal sections of the society. It was not yet mature, but had all the ingredients of any mainstream industry, they believed.

DEEPAK ALOK CO-FOUNDER, M2I CONSULTING

Microfinance Management and Investment (M2i) Consulting came into being in March 2006and quickly landed a client in ESAF, Thrissur. The start-up advised ESAF on capital structure and conducted training. The success of the first assignment was noted and ICICI Bank soon signed up as a customer.

The company got its first international assignment from Microfinance Investment and Support Facility for Afghanistan (MISFA). M2i assessed the financials of an MFI called Parwaz, which later became its client. More projects came from southeast A s i a n countries and the team had to travel to places like Indonesia, P h i l i p - pines and Cambodia.

Today, M2i’s client list includes Rashtriya Grameen Vikas Nidhi (RGVN), Sadhan, Development Alternatives, ESAF, Cashpor, BISWA, Nirmaan Bharati and Appropriate Technology India (ATI). M2i trains, provides support and management consultancy to MFIs. It also helps these institutions in designing products for their clients — the villagers who borrow money from these MFIs.

Microfinance institutions often find raising capital a difficult proposition, given that the rural banking mechanism is unfamiliar to most investors, including private equity and venture capital firms. Making money in microfinance is itself a challenge and providing corporate advisory services could have been even more so, but M2i navigated through the early difficulty of winning clients by leveraging the prior contacts the partners had. “Initially, we were apprehensive, we weren’t sure how it will work. But, we had the confidence that it was all that we wanted to do,” Mr Bist says.

RAHUL BIST CO-FOUNDER, M2I CONSULTING

The company, which now employs 11, has made profits from the first year of operation in 2006-07. It had a revenue of about Rs 15 lakh in the first year and Rs 40 lakh in the nine months of the current fiscal. It has a profit margin of 10%.

Entrepreneurship makes you an all-rounder, feels Mr Alok. Initially, he had to do everything from writing the books of accounts to ensuring numerous regulatory compliances and most of his time was spent on them. “But, it’s only when you go through this experience that you realise how very discouraging complex regulatory requirements can be for a start-up. Thankfully we now have fairly standardised and streamlined systems.”

Article Resource:The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

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